UPDATED, 4:00 p.m., March 29: An affiliate of Raphael Toledano’s Brookhill Properties filed Chapter 11 bankruptcy protection on a 15-building East Village portfolio, according to bankruptcy documents reviewed by The Real Deal. Toledano was in contract to sell the portfolio to Joseph Sutton, son of retail mogul Jeff Sutton, for $145 million, but sources said that deal is now off the table.

The bankruptcy filing in U.S. Bankruptcy Court for the Southern District of New York, submitted on Tuesday, comes more than a month after Madison Realty Capital filed to foreclose on the package of multifamily walk-ups acquired by the 27-year-old landlord in 2015.

At the same time, Toledano, the controversial broker-turned-multifamily investor who runs Brookhill , was in contract to sell the buildings to Joseph Sutton, son of retail mogul Jeff Sutton, for about $145 million. Now that the deal with Sutton is no longer happening, Toledano is looking for other suitors, sources said.

The bankruptcy filing, submitted by Brookhill-controlled entity East Village Properties LLC, would buy Toledano more time to sell the buildings and avoid foreclosure.

Toledano and Sutton declined to comment. Sources familiar with the deal said that Sutton did not want to be associated with a deal tainted with a bankruptcy filing. Sources close to Toledano said he requested that Sutton exit the deal in a bid to increase his leverage with Madison. Sutton complied with this request, the sources said.

“It’s the standard playbook of lender trying to foreclose and debtor trying to stay that,” said portfolio manager Adam Stein-Sapir of Pioneer Funding Group, who is not involved.

“You have 18 months to file a plan of reorganization but parties can move to shorten the exclusivity period,” Stein-Sapir added. “Someone could challenge that and say it should only go to 60 or 90 days. In this case, it’s most likely to be one of the mortgage holders. It gives that party some leverage to direct the case, whereas the standard is for the debtor to direct their own case.”

Madison claimed in its filing that Toledano owes roughly $140 million, including $125 million in loans against the 15 properties, plus interest and attorneys’ fees. Madison, an investor-lender led by Josh Zegen and Brian Shatz, had provided the financing for Toledano’s $97 million purchase of the buildings in September 2015 from the Tabak family. The loan was intended to cover future renovation costs in addition to the acquisition, though industry sources had accused Toledano of being overleveraged.